SpaceX showed investors a handset prototype running on a proprietary OS with xAI integration, the WSJ reported. The early-stage device is slimmer than an iPhone and ties into Musk's 'everything app' vision through X Money.
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SpaceX has built a prototype handset designed to run on a proprietary OS with deep AI integration from its xAI unit, the Wall Street Journal reported Wednesday, citing people familiar with the matter. The device is slimmer than an iPhone and was shown to investors ahead of SpaceX's recent IPO, the sources said.
The project is early-stage and the design could still change. PYMNTS has not received a response from SpaceX on the report.
Musk has publicly flip-flopped on the idea of making a phone. Last October he said "the idea of making a phone makes me want to die" but added "if we have to make a phone, we will." In February he denied the company was building a Starlink-connected phone at all. "We are not developing a phone," he posted on X.
The WSJ's sources said the current prototype draws on the "everything app" concept Musk pushed when he bought X in 2022 – a single platform for payments, messaging, travel, and commerce. X Money is already testing that model with accounts for everyday spending and saving, plus the ability to send wires or pay rent from within the app.
SpaceX also paid $60 billion for AI coding startup Cursor shortly after its IPO, following the absorption of xAI earlier this year. That deal gave the company computing infrastructure plus a revenue-generating tool with an existing base of paying professional developers, as PYMNTS reported.
The combination of the handset hardware, the xAI software stack, and the payments integration through X Money suggests Musk is building the full vertical – device, OS, AI layer, and financial rails – rather than outsourcing any one piece to Apple or Google. The prototype simply shows that investment thesis in hardware form.
The risk is the same one that has killed every smartphone challenger since 2007: app distribution, carrier relationships, and supply chain at scale. Musk knows the math. The WSJ's sources noted last year that he considered building a phone out of frustration with Apple's control over third-party app distribution. That frustration hasn't gone away; it just now has a prototype attached.
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